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Remuneration of Public Service and State sector senior staff as at 30 June 2014

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Published:11 December 2014

ISBN:978-0-478-43431-6

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An overview of the Commissioner's role and his remuneration policy is published below.

Annual Reporting of Chief Executive Remuneration

Cabinet has agreed that remuneration paid to Public Service and State sector senior staff should be disclosed annually in one location. This provides transparency for the taxpaying public around the level of remuneration received by senior State servants.

The report on the remuneration of Public Service and State sector senior staff as at 30 June 2014 is available here.

The State Services Commissioner's role

The State Services Commissioner (the Commissioner) sets and reviews the remuneration of most Public Service chief executives 1 and advises on or approves the proposed terms and conditions of employment of 104 Crown entity chief executives (including tertiary education institutions and district health boards) and the chief executives of any of their subsidiaries. The Commissioner therefore has a direct influence on the remuneration received by about 130 chief executive positions in the State sector:

Under the State Sector Act 1988, the Commissioner appoints and employs most Public Service chief executives, and reviews their performance.

The State Sector Act 1988 also requires the boards of tertiary education institutions (universities, polytechnics and wānanga) to obtain the written concurrence of the Commissioner to the terms and conditions of employment for their chief executives.

The Public Health and Disability Act 2000 requires district health boards to obtain the consent of the Commissioner to the terms and conditions of employment for their chief executives.

The Crown Entities Act 2004 requires boards of statutory entities to consult the Commissioner about the terms and conditions of employment for their chief executives.

There are a small number of other agencies whose enabling legislation requires the Commissioner to be involved in setting the terms and conditions of employment for their chief executives.

Remuneration policy

Government policy is that increases to chief executive remuneration are modest, performance-related, and consider business issues such as recruitment, retention, and affordability.

The main features of the policy are:

it links chief executive remuneration to chief executive remuneration practice in the public sector 2

it provides flexibility and discretion for the Commissioner to set remuneration policy within broad boundaries determined by the Government, and

it links chief executives' remuneration to their performance, by including a performance related component in their remuneration packages.

meets the Government's expectations for pay and employment conditions in the State sector

supports the business of Government

inspires public confidence.

Remuneration movement guidance for 2013/14

The Commissioner continues to take a conservative approach around increases to remuneration for Public Service and Crown entity chief executives. However, there continue to be instances where larger increases to remuneration are supported by the Commissioner, for example, where there has been a significant increase in a chief executive's job size.

Crown entity chief executive remuneration is set by Crown entity board chairs after consultation with the Commissioner. The Commissioner provides all board chairs with guidance when considering increases to remuneration. This indicates the Commissioner's expectations for reasonable increases to remuneration, taking into account individual performance, and a chief executive's position in a remuneration range. This guidance is summarised in the table below.

The Commissioner is also using a similar method for determining increases to Public Service chief executive remuneration. The approach used for determining Public Service increases in 2013/14 is summarised in the table below.

This is structured slightly differently to the guidance for Crown entity chief executives, as it recognises that Public Service chief executive remuneration lags behind that of Crown entity chief executives in similar size roles.

Public Service Chief Executive Remuneration Expenditure

The Commissioner sets the individual remuneration for most Public Service chief executives but the overall wage bill is capped by the budget allocated by Government.

Figure 1 shows expenditure on remuneration, training and development, relocation costs and end of term payments for Public Service chief executives

Expenditure increased during the period 2006/07 to 2008/09, reflecting more buoyant labour market conditions and to allow some catch-up of Public Service chief executive remuneration with other parts of the State sector.

Decreases in expenditure occurred in 2009/10 and 2010/11, reflecting an environment of continued fiscal restraint and modest remuneration expectations.

The increase in expenditure for 2011/12 reflected payments to chief executives with untaken annual leave at the end of their terms, and relocation costs for newly appointed chief executives.

The decrease in expenditure for the 2012/13 year reflected an environment of continued fiscal restraint, a reduction in the number of Public Service departments and reduced relocation costs for newly appointed chief executives.

The decrease in expenditure in 2013/14 reflects a reduction in Public Service chief executive positions over the past few years and, more recently, a long-standing vacancy and lower end-of-term payments.

Figure 1: Expenditure on Public Service Chief Executive remuneration, training and development, relocation costs and end of term payments

1: The Commissioner does not set remuneration for the chief executives of three departments: the State Services Commission, the Crown Law Office and the Government Communications Security Bureau. Remuneration for these positions is set by the Remuneration Authority.

2: The State sector plus the organisations of local government in New Zealand collectively make up the "public sector".